This website uses cookies.

By clicking the "Accept" button or continuing to browse our site, you agree to first-party and session-only cookies being stored on your device to enhance site navigation and analyze site performance and traffic. For more information on our use of cookies, please see our Privacy Policy.

  1. Home
  2. Journals
  3. American Economic Journal: Economic Policy
  4. Forthcoming Articles
  5. Real-Time Pricing and the Cost of Clean Power

Real-Time Pricing and the Cost of Clean Power

  • Imelda
  • Matthias Fripp
  • Michael J. Roberts
American Economic Journal: Economic Policy (Forthcoming)

Abstract

Solar and wind power are now cheaper than fossil fuels but are intermittent. The extra supply-side variability implies growing benefits of using real-time retail pricing (RTP). We evaluate the potential gains of RTP using a model that jointly solves investment, supply, storage, and demand to obtain a chronologically detailed dynamic equilibrium for the island of Oahu, Hawai'i. We find that RTP reduces costs in high-renewable systems by roughly 6 to 12 times as much as in fossil systems holding demand assumptions fixed, markedly lowering the cost of clean energy integration.

Downloads